World-Renowned Economist, Former Treasury Secretary, and Former Harvard President Larry Summers Stops By “Great Minds Think Data” Podcast to Talk Inflation, The Federal Reserve, Energy Policy and More
Premise also debuts newest “Premise Poll” on economic sentiments, with only 16% of respondents believing the economy is in “good” condition
Summers: “I’ve got a deep conviction, Maury, that if people see the world more clearly, they’ll make better decisions”
SAN FRANCISCO, October 11, 2022 – Lawrence “Larry” Summers, one of the world’s foremost economists, former U.S. Secretary of the Treasury and former Harvard University President appeared on the “Great Minds Think Data” podcast’s newest episode, speaking with host and Premise CEO Maury Blackman about the nation’s high inflation, the Federal Reserve, and other policy issues impacting the United States.
Alongside the podcast, Premise released a “Premise Poll” on economic sentiments across the country. Only 16% of respondents believe that the economy is in “excellent” or “good” condition, with 34% of respondents believing it is in “fair” condition and 47% of respondents believing it is in “poor” condition.
Last April, Summers published writing in The Washington Post, discussing how the Federal Reserve’s policies could lead to a period of high inflation. Summers has since been proven right, with consumers grappling with high prices all summer and still today. In discussing inflation and the historic 2021 American Rescue Plan stimulus package, Summers explained, “It should have been half the size, or maybe a little less than half the size. Its basic premise that the economy had a major problem with being demand short was wrong by 2021.”
Summers continued, “We were coming into a recovery, coming out of the COVID period. The dynamic for understanding what was happening in the economy was a little bit like the dynamic of what happens on Cape Cod in the town I vacation in in the summer as winter turns to summer. Businesses are closed, then demand starts again, then people come back, once people are back at work, they’re back at spending, and it all sort of fixes itself. And when you take a system like that, and you infuse large amounts of money into it, you’re taking extra risks. And that’s what we did.”
Later in the interview, Summers addressed the importance of an immediate inflation response, saying, “And so the lesson I’ve learned is that it’s important to try to respond to inflation early, and try to make sure that it doesn’t ever get to a level where it’s what’s defining what’s going on in the society, and that’s the mistake we made in the 1960s and the 1970s. That’s the mistake that is made very very frequently in emerging markets and it’s a mistake we’ve largely avoided until now over the last several decades.”
As part of the “Premise Poll,” 25% of respondents said they “strongly approve” or “somewhat” approve of President Biden’s handling of inflation. 28% of respondents “neither approve nor disapprove” of Biden’s handling of inflation, and 47% of respondents either “somewhat disapprove” or “strongly disapprove” of Biden’s handling of the issue.
Blackman also questioned Summers about the potential for the country to enter a recession over the coming months. Summers responded, “I think at this point, given the excesses that we have had and given the challenges associated with supply shocks, the Ukraine war, all of that, one would have to say that the preponderant probability was that we will have a recession. We can hope to be lucky, and I wouldn’t rule out the possibility at all that we will be lucky and that a recession will be avoided, but I think it’s probably a little less than one in four that that will take place, but it certainly could.” In an alarming sign for the U.S. economy, 65% of respondents indicated they did not have the resources to manage a financial emergency, whereas only 35% said they did.
At the end of the interview, Summers left listeners with learnings from his storied career, including saying, “It’s very important, always for all of us, to try very hard to see the world as it is, rather than how we’d like it to be, and that a huge fraction of the world’s mistakes and the world’s bad choices come out of motivated reasoning.”
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